Downward Nominal and Real Wage Rigidity : Survey Evidence from European Firms

Downward Nominal and Real Wage Rigidity : Survey Evidence from European Firms

We present new evidence from a unique survey of firms across Europe on downward wage rigidity in both real and nominal terms. Our results indicate that wage rigidities are related to workforce composition in a manner that is consistent with related theoretical models. We also find that wage rigidity...

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Bibliographic Details
Main Authors: Babecky, Jan, Du Caju, Philip, Kosma, Theodora, Lawless, Martina, Messina, Julian, Room, Tairi
Format: Journal Article
Language:EN
Published: 2012
Subjects:
Economics of Contract: Theory D860
Employment
Unemployment
Wages
Intergenerational Income Distribution
Aggregate Human Capital E240
Wage Level and Structure
Wage Differentials J310
Labor Contracts J410
Labor Law K310
Online Access:http://hdl.handle.net/10986/4853
Description
Summary:We present new evidence from a unique survey of firms across Europe on downward wage rigidity in both real and nominal terms. Our results indicate that wage rigidities are related to workforce composition in a manner that is consistent with related theoretical models. We also find that wage rigidity depends on the labour market institutional environment. Collective bargaining coverage is positively related with downward real wage rigidity, measured on the basis of wage indexation. Downward nominal wage rigidity is positively associated with the extent of permanent contracts and this effect is stronger in countries with stricter employment protection regulations.

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